LifeLock seems to have a tough time staying out of legal trouble. The story starts with LifeLock’s “innovative” and “state of the art” identity theft protection system. What was so innovative about the system? If you wanted to sign up for LifeLock, you call the company and their innovative system was to call the credit reporting agencies on your behalf and place a fraud alert on your credit report and continue to renew it.
A fraud alert will tell anyone trying to issue new credit in your name that there is the possibility that your personal information has been compromised. Thus before any new credit is issued, they have to verify it is you requesting the new credit.
So, why in the world would the Federal Trade Commission (FTC) have a problem with their innovation?
First, the Fair Credit Reporting Act says any consumer can place a fraud alert on their account. So, you can do this yourself for free.
Second, the Fair Credit Reporting Act says a consumer can request a fraud alert be put on their account “whose asserts in good faith a suspicion that the consumer has been or is about to become a victim of fraud or related crime…” The Fair Credit Reporting Act does not say that you can just request a fraud alert because you want to. There has to be a reason. Thus, LifeLock was using the system to their advantage.
In 2010, LifeLock agreed to pay 11 million dollars to the FTC and 1 million back to customers to settle deceptive practices charges that they were using false claims to promote their identity theft protection services. They were also required to take more stringent measures to safeguard the personal information they collected from their subscribers.
As a side note, CEO Todd Davis would give out his social security number on TV and said he was not worried because he was also a customer. Maybe he should worry since his identity was compromised 13 times.
Fast forward to Tuesday of this week and the FTC is at it again. The FTC said in court documents that were filed Tuesday that the company is continuing to make misleading claims about its service.
The FTC also alleges that LifeLock failed to fulfill the original settlement in 2010 by not creating and maintaining “a comprehensive information security program” to protect customer data such as credit card, bank account and Social Security numbers.
The FTC also claimed that LifeLock falsely claimed in ads that it provided customers with the same sort of protections used by financial institutions, and that from at least January 2012 through December of last year, the company “falsely claimed it protected consumers’ identity 24/7/365 by providing alerts ‘as soon as’ it received any indication there was a problem.”
So, this brings us to a question. Do you do business with a company who settled for 12 million dollars one time and is being charged a second time by the Federal Trade Commission? In addition, all charges revolve around deception?
Although they are not guilty until they settle, there are too many companies with integrity. Where there is smoke, there is probably fire. For me, I wouldn’t trust them to be my strategy for protecting my identity.